september 2020...source: servicenow investor presentation, linkedin, company website, servicenow...
TRANSCRIPT
SEPTEMBER 2020
Source: ServiceNow investor presentation & annual report, Fortune. ITAM- IT Asset Management; ITOM- IT Operation Management; ITSM- IT Service Management; GRC- Governance, Risk & Compliance; CSM- Customer Service Management
Now Platform (3 Core Workflows)
CSMField
Services
HR Service
Delivery
Fin Ops
Mgmt.Onboarding
ITAM
ITSM
ITOM
GRC
DevOps
SecurityOps
66%
23%
11%
IT Workflow
Employee &
Customer
Now Platform &
Others
$110Bn
$165Bn
2018 2023
30% year-on-year increase in
revenues
700% increase in revenue in past
5 years
Well diversified portfolio of clients
with a 97% retention rate
Deep technology expertise with
investments in AI, ML & Analytics
Workforce of 11,000+
professionals across offices
Strong management with new
CEO being ex-CEO of SAP
Over 90% revenue is yearly
subscription based
Company guided by aggressive
revenue target of $10Bn
As the foundation of ServiceNow’s workflow offerings, the
platform enables customers and third- party developers to
create, test and deploy their own applications
Integrated IT workflow system for issue resolution. It has
applications in serving customers, managing networks,
identifying and remediating threats and building products
Now
Platform
IT Workflow
Employee &
Customer
Workflow
Services for employee & customer engagement. It improves
employee productivity and increases customer loyalty by
catering to issues quickly & offering a seamless experience
IT
Workflows
Customer
Workflows
Employee
Workflows
2
Source: MarketsandMarkets, Gartner, Solarwinds
4,323
15,668
2018A 2026E
Increasing adoption of cloud has changed
the enterprise operating model
Complex & broken workflows and
associated business processes
Revamping the old already existing
workflows
Growth in advanced ITSM requirements –
analytics, chatbots, among others
Digital enablement & quest to improve
services to benefit customers
Organizations opting for external products
rather than developing in-house
Increase efficiency of the service desk by
reducing manual tasks
Strategic partnerships with tech giants to
increase customer base
The Influence of DevOps on Change and Release Management
The Prevalence of Mobile in the Workplace
Increased Importance of IT Asset Data
Increased Convenience and Speed of Service Delivery
AI Has Been Put to Work
3
Completeness of Vision As of Jul 2019
Ab
ilit
y to
Exe
cu
te
CHALLENGERS LEADERS
NICHE PLAYERS VISIONERIES
Rapidly evolving and highly competitive, with relatively low barriers to entry
Compete primarily with large, well-established, enterprise application software
vendors and in-house solutions
Total cost of ownership, customer satisfaction, breadth & depth of functionality,
security, industry standards, brand, flexibility & performance affect purchase
decisions
4
Market share of
ServiceNow in
ITSM industry-
has grown from
10% to 35% in 6
years
36%
14%9%
7%
6%
4%
3%3%
2%
1%
15%
ServiceNow
Atlassian
BMC
ivanti
LogMein
Microsoft
IBM
SolarWinds
CA Technologies, a Broadcom Company
ASG Technologies
Others
ServiceNow has made
several to AI and ML
functionality as add-ons
to its ITSM product
ServiceNow has
restricted support old
versions which requires
customers to perform an
upgrade at least yearly
ServiceNow has global
reach with local sales
and support
organizations and strong
brand recognition
Source: ServiceNow annual report, Garter magic quadrant report, Apps Run The World
5
44%
21%
35% 50-200
200-1000
>1000
Digital Enablement BPO, Service Desks Staffing Solutions
Managed Services,
AppDev & Integration IT Infra Management CRM, ERP
4%
33%
47%
14%
2%Global Elite: Elite partner with CEO-level commitment to ServiceNow & to reach
$1Bn SN practice in 3-5 years
Elite: specializes in 5+ ServiceNow products across workflows in multiple
geographies
Premier: Focused on <5 ServiceNow products, in more than one geographic
region
Specialist: Highly specialized skills in a specific area in one or more ServiceNow
products
Registered: New to ServiceNow, yet to achieve measurable activity/certification 544
718
933
Q1 2018 Q1 2019 Q1 2020
Customers > $1Mn ACV
ServiceNow ecosystem has a network of
1,200+ partners- well diversified in their
offerings
Global IT Consulting companies have
already taken a stance in favor of
ServiceNow
ServiceNow partners have known to
increase their capabilities organically as
well as inorganically- another sign of
commitment
SN’s new partner based on capacity,
competency, customer access &
capability is a step to achieve a $10Bn
revenue target
Source: ServiceNow investor presentation, LinkedIn, Company website, ServiceNow website, Businesswire, HFS
80% of Fortune 500
companies use
ServiceNow
Serves 6,200+ global
enterprises
Well-diversified portfolio
of clients with a 97%
retention rate
Source: ServiceNow investor presentation, LinkedIn, Company website, ServiceNow website6
NORTH AMERICA
Revenue
Contribution
Partners
HQ’ed
APAC & OTHERS
Revenue
Contribution
Partners
HQ’ed
EUROPE
Revenue
Contribution
Partners
HQ’ed
Source: LinkedIn, Company website, ServiceNow website7
Em
plo
yee
s
Partnership level
GLOBAL ELITEELITEPREMIERSPECIALIST & REGISTERED
CATEGORY
GLOBAL IT
OUTSOURCING &
CONSULTING
MID MARKET IT
COMAPNIES
IT INFRA MANAGEMENT
OVERVIEW OF TYPE OF WORK
▪ Business Consulting
▪ Strategy
▪ Change Management
▪ Staffing solutions
▪ Technology Implementation
▪ Ongoing Support
▪ Consulting
▪ Technology Implementation
▪ Ongoing Support
▪ Cloud computing, management, hosting
▪ Data center & Network management
▪ Workplace management- OS, Virtualization
INVESTOR
Source: Mergermarket, channele2e, LinkedIn, Company website8
OTHERS
▪ Federal government IT service providers
▪ Staffing players
▪ Private Equity funds
▪ Digital enablement & DevOps
▪ Cybersecurity
▪ Analytics
Feb-20
$22Mn
Feb-20
Undisclosed
Jan-20
Sep-19
Aug-19
Jun-19
Apr-19
Feb-19
Dec-18
Nov-18
Oct-18
Oct-17
Oct-17
Apr-17
Jan-17
Jan-17
Nov-16
Aug-16
$255Mn
Undisclosed
Undisclosed
Undisclosed
Undisclosed
$88Mn
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Large players continue to
invest in cloud & digital
capabilities
Acquisition of companies
providing services to Federal
Government & Defense
Investment
Drivers
Source: Mergermarket, channele2e, LinkedIn, Company website
Managed services & IT infra
management companies
expanding their offerings
9
10
▪ Revenue growth >20%
▪ EBITDA margin >12%
▪ Revenue >$50Mn provides differential
value due to scale
▪ Enterprise preferred to mid-tier
▪ Long-standing relationships preferred
▪ Presence of Fortune 500 clients is
favorable
▪ Technology IP and proprietary data are
key differentiators
▪ Higher impact on valuation if IP is
monetized
▪ Optimal balance of managed services
and project-based revenues
▪ Managed services help increase wallet
share and revenue visibility
▪ US market focus is most attractive given
the depth of market and size/breadth of
client accounts
▪ Developed markets-focus is the next top
priority
▪ Scaled presence in each geography
attractive
▪ Exclusive single platform challenging for
PEs but preferable for strategic investors
▪ Number of employee certifications &
partnership level of the asset with the
platform
▪ Other capabilities of the asset- IT Infra
management, digital capabilities, staffing
solutions, etc. affect valuation
▪ Referenceable client case studies and
conversations with clients help build
confidence during diligence process
▪ Potential investors look for tangible and
demonstrated results to validate
synergies
Announced
DateTarget Target Description Acquirer
EV
($Mn)
LTM EV /
Revenue
LTM EV /
EBITDA
May-20 Column TechnologiesUS-based a ServiceNow-focused consulting and solutions provider for
information security
Parabellum Investments &
The Acacia Group- - -
Feb-20 EdgeRock Technology Partners US-based provider of IT staffing solutions BG Staffing 22 0.5x -
Feb-20 Wirefire CreativeCanada-based company that develops application and provides support
services for the ServiceNow platformKPMG - - -
Jan-20 Incentive Technology GroupUS-based digital consulting firm delivering IT systems modernization and
business transformation for government and commercial clientsICF International 255 2.8x 10.2x
Dec-19 Service PotentialAustralia-based company engaged in providing IT consulting and support
services to GovernmentEpicon IT Solutions - - -
Sep-19 Intellinet Technologies IncCanada-based company engaged in providing Network Computing
Managed Services and Cloud Computing servicesCoreio - - -
Aug-19 Syscom Norway-based IT security and service management company DXC - - -
Jun-19 BusinessForward US-based technology management consulting firm Acorio - - -
Jun-19 Lime Collar GroupCanada-based company providing next generation enterprise service
management solutionsFully Managed - - -
Apr-19 VirtevaUS-based provider of managed services for digital enterprises and a Gold
ServiceNow partnerRLJ Equity Partners - - -
Apr-19 Entrago Australia-based company that provides IT consulting services Trimantium GrowthOps - - -
Feb-19 Scalar DecisionsCanada-based engineering-led IT solutions integrator focused on data
center automation and cloud enablementCDW 88 0.5x -
11
Announced
DateTarget Target Description Acquirer
EV
($Mn)
LTM EV /
Revenue
LTM EV /
EBITDA
Feb-19 Zefflin Systems US-based software systems integratorEnterprise Vision
Technologies- - -
Dec-18 Tony Grice & AssociatesCanada-based company engaged in providing cloud integration and
related IT support and consulting servicesCoreio - - -
Nov-18TESM Limited; BusinessNow
P/S
UK-based cloud and IT service management company; Denmark-based IT
consultancy companyDXC - - -
Oct-18 SystemiC US-based IT consulting firm Champion Solutions - - -
Oct-17 ImakumoFrance-based provider of cloud-based services that automate enterprise
operationsAtos - - -
Oct-17 Logicalis SMCNetherlands-based provider of technology-enabled solutions for the
service management sectorDXC - - -
Apr-17 Team Ultra UK-based IT services provider Computacenter - - -
Jan-17 Solid-serVision Germany-based company that provides service management solutions Accenture - - -
Jan-17 Engage ESMUK-based provider of consulting and enterprise service management
technology solutionsAtos - - -
Nov-16 Nashco SolutionsCanada-based company that provides consulting, design and
implementation services for ServiceNowAccenture - - -
Aug-16 Symfoni Norway-based company engaged in providing collaborative solutions Fujitsu - - -
12
Mkt Cap
($Mn)
Enterprise Value
($Mn)
3 Yr. Historical
Rev. CAGR
LTM
Company
Revenue
($Mn)
EBITDA
($Mn) EBITDA Margin EV/Revenue EV/EBITDA P/E
INTERNATIONAL LARE-CAP IT SERVICES
ACCENTURE 144,512 142,047 6.0% 44,547 7,221 16% 3.2x 19.7x 29.2x
IBM 112,070 167,868 (3.3%) 75,499 15,577 21% 2.2x 10.8x 14.2x
COGNIZANT 36,829 35,714 3.9% 16,757 3,294 20% 2.1x 10.8x 22.7x
CAPGEMINI 21,847 23,764 2.7% 15,851 2,026 13% 1.5x 11.7x 22.7x
INDIAN LARGE-CAP IT SERVICES
TCS 112,517 108,446 6% 20,797 5,394 26% 5.2x 20.1x 27.2x
INFOSYS 53,698 51,348 7% 12,770 3,121 24% 4.0x 16.5x 22.9x
HCL 25,053 24,789 11% 9,928 2,459 25% 2.5x 10.1x 15.5x
WIPRO 21,410 17,687 1% 8,104 1,577 19% 2.2x 11.2x 16.6x
TECH MAHINDRA 7,585 6,969 3% 4,941 685 14% 1.4x 10.2x 14.2x
Mean 4% 20% 2.7x 13.5x 20.6x
Median 4% 20% 2.2x 11.2x 22.7x
13Source: CapIQ as on August 4th, 2020
14Source: CapIQ as on August 4th, 2020
Mkt Cap
($Mn)
Enterprise Value
($Mn)
3 Yr. Historical
Rev. CAGR
LTM
Company
Revenue
($Mn)
EBITDA
($Mn) EBITDA Margin EV/Revenue EV/EBITDA P/E
INTERNATIONAL MID-CAP IT SERVICES
PERFICIENT 1,348 1,503 8% 582 83 14% 2.6x 18.1x 36.3x
VIRTUSA 1,185 1,501 9% 1,294 105 8% 1.2x 14.2x 27.6x
AKKA 450 717 12% 2,022 155 8% 0.4x 4.6x 5.5x
HACKETT GROUP 409 395 1% 264 40 15% 1.5x 9.8x 18.8x
INDIAN MID-CAP IT SERVICES
MPHASIS 2,743 2,633 10% 1,201 200 17% 2.2x 13.2x 17.3x
MINDTREE 2,471 2,312 11% 1,038 152 15% 2.2x 15.2x 24.8x
NIIT TECH 1,569 1,496 12% 566 90 16% 2.6x 16.6x 27.2x
HEXAWARE 1,556 1,544 15% 810 129 16% 1.9x 12.0x 17.3x
PERSISTENT 968 838 4% 493 65 13% 1.7x 12.9x 21.0x
ZENSAR 523 476 7% 543 69 13% 0.9x 6.9x 15.1x
Mean 9% 13% 1.7x 12.4x 21.1x
Median 9% 14% 1.8x 13.1x 19.9x
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